ARC & PLC Are Not Crop Insurance

We had a reader ask the following question:

“Paul, I have been reading your blogs about federal crop ins.  Is PLC and ARC the whole program or do we still have the traditional options that we have had the last few years? If the traditional plan is still in place will we have to pick between the whole farm option and enterprise units? Most of my farming friends here in Northern Illinois are wondering the same thing.”

I have gotten similar questions from other readers.  The new ARC and PLC programs contained in the new Farm Bill are “programs” to replace the old DCP and ACRE payments.  They are not crop insurance.  Title I of the Farm Bill deals with the program payments and ARC and PLC are contained in Part II of Title I.  Other commodity provisions such as the Dairy Margin Protection Program, Marketing loans, Sugar provisions, etc. are also contained in Title I.  Since these are farm programs, there are payment limitations on them.  A producer can not receive more than $125,000 ($250,000 if married) in program payments in any crop year.  If your three-year average adjusted gross income (AGI) exceeds $900,000, then you will have to pay back any program payments received.

Title XI contains all of the provisions relating to crop insurance.  This includes the new Supplemental Coverage Option (SCO) which is only available with PLC.  Your current crop insurance options essentially remain the same as in the prior farm bill (with certain tweaks on coverage options and new products).  Crop insurance proceeds have no limitation on the amount a farmer can receive. There is also no AGI limitation.

With regards to the option on choosing between whole farm and enterprise units, I am not an expert on crop insurance and all of the rules.  In reading the bill, there is an option to have different coverage levels for irrigated and non-irrigated crops, but I did not see anything else.  You should discuss this with your crop insurance agent.

Paul Neiffer, CPA

If there are any crop insurance agents out there that know if new changes in this area are applicable, please let me know.